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4 Stocks to Watch as Industrial Automation Adoption Continues

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The implementation of industrial automation has increased over the years as it provides manufacturers the ability to improve efficiency and productivity. Automotive manufacturers have been using robots in assembly lines for decades, for precision-oriented tasks like welding, among others. Repetitive tasks can also be automated with the help of robots, reducing the need for manual intervention. Robots can also work round the clock and help in speeding up the production process.

In fact, robots can work with greater efficiency, reducing the chances of errors. This can help in manufacturing more quality products, which is of prime importance in today’s competitive scenario. While the initial cost of setting up automation infrastructure might be high, over time, the cost of operating and maintaining such machinery will go down, making them cheaper in comparison to human labor.

Robots can also be energy efficient and according to a report by the International Federation of Robotics (“IFR”), robots can help lower overall carbon footprint in manufacturing. The IFR report stated that this can be achieved by minimizing material waste and allowing manufacturers to optimize space and hence, “the energy associated with lighting and heating.”

Industrial automation is also beneficial in reducing safety risks within the work environment. This is because robots can be programmed to perform several hazardous and heavy tasks, thereby reducing the chances of human injury. Even if the machines require some control, they can be operated from a safe distance.

Advancements in technology over the years have been a driving force behind the rapid adoption of industrial automation. The emergence of the Industrial Internet of Things has enhanced efficiency further. With data collected from several interconnected equipment, manufacturers are gaining useful insights into the production process, identifying and rectifying errors to make more informed decisions.

Reflective of the positives that industrial automation continues to bring to manufacturing, it is only expected that the industrial automation market will grow further. Per a report by Expert Market Research, the global industrial automation market is estimated to witness a CAGR of 8% from 2021 to 2026.

4 Stocks to Watch

The adoption of industrial automation seems ready to continue as manufacturers look to increase efficiency and enhance the quality of products while reducing overall costs. This makes it a good time then to look at stocks that can make the most of this potential. We have selected four such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABB Ltd (ABB - Free Report) manufactures and sells electrification, industrial automation, and robotics and motion products. In October 2020, ABB announced the acquisition of Codian Robotics B.V., which offers delta robots, thereby expanding its portfolio of industrial robots.

Shares of this Zacks Rank #2 company have risen 33.4% year to date. The Zacks Consensus Estimate for its current-year earnings increased 7.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 38.8%.

National Instruments Corporation (NATI - Free Report) provides application software like NI TestStand that is used for automated test and measurement applications in a manufacturing environment. It also offers NI DIAdem, configuration-based technical data management, analysis, and report generation tools to mine and analyze engineering and measurement data, and NI SystemLink for the mass coordination of connected devices, among other uses.

Shares of National Instruments have gained 6.8% over the past three months. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 19.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 31.5%.

AMETEK, Inc.’s (AME - Free Report) Electronic Instruments segment offers process and analytical instruments for the oil and gas, petrochemical, pharmaceutical, semiconductor, automation, and food and beverage industries; advanced instruments for the process, aerospace, power, and industrial markets, and so on. On Mar 29, the company announced the acquisition of EGS Automation, which designs and manufactures highly engineered, customized robotic solutions.

Shares of AMETEK have risen 13.2% year to date. The Zacks Consensus Estimate for its current-year earnings increased 1.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 17.5%. AMETEK currently has a Zacks Rank #2.

Rockwell Automation, Inc. (ROK - Free Report) provides industrial automation and digital transformation solutions. On Jun 25, the company announced that it has entered into an agreement to acquire Plex Systems, which provides a cloud-native smart manufacturing platform operating at scale, for $2.22 billion in cash.

Shares of Rockwell Automation have risen 25.1% year to date. The Zacks Consensus Estimate for its current-year earnings increased 0.8% over the past 60 days. The Zacks Rank #3 company’s expected earnings growth rate for the current year is 20.8%.

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